Consumers Warming Up to Mobile Coupons

Coupons of all sort have been made a comeback in recent years, thanks in part to the decline in the economy and the increase in online coupon-delivery technology. A new report from Borrell Associates says that trend is set to continue on mobile devices, as cell phones and GPS-enabled smart phones become a popular platform for offering customer discounts.

Total mobile coupon spending in the U.S. is expected to rise from $90 million in 2009 to $6.53 billion in 2014, according to the 2010 U.S. Local Mobile Advertising and Promotions Forecast. That number is predicted to hit $370 million in 2010. By comparison, total U.S. spend on Internet coupons in 2009 was $4.2 billion, and is expected to hit $22.6 billion in 2014.

Local couponing, which is traditionally slower to grow, will account for $4 of every $100 spent on mobile coupons this year, but will reach $1 out of every $6 by 2014, the report said.

Driving that growth is a combination of economic need and the fact that phones are becoming better equipped to deliver coupons and coupon apps.

“When the economy goes down, people tend to find ways to save money, and there was certainly a very large spike in coupon usage last year,” said Gordon Borrell, CEO of Borrell Associates. “It’s also that the proximity of the mobile device to someone’s wallet is a heck of a lot closer than a PC when you’re out driving around.”

While Internet coupons still account for much more of the market than mobile ones, the report found that the redeemed value of mobile coupons is 24 percent higher than Internet coupons and nearly half as high as paper coupons. The reason, Borrell said, is that most mobile coupons are of the opt-in variety, which tend to be of greater value.

But while those numbers may seem encouraging to marketers, Borrell noted that they signified consumers are still not interested in receiving unsolicited coupons.

“The magic is in the opt-in,” he said. “It’s in requesting stuff that is something you really want. It really is marketing more to your loyal customer base, and that’s not a bad thing with all the competition out there.”

Technology is playing a significant role in the expansion of mobile coupons. Smart phones, which are still a relatively small percentage of the mobile device market, are nonetheless driving mobile coupon spend in two major ways: GPS capability allows marketers to offer discounts to consumers who are nearby and poised to spend, and apps are giving marketers the chance to reach consumers in a media-rich way.

Still, Borrell says expensive apps should not distract marketers from the easiest, most cost-effective ways of offering mobile discounts.

“The simplest things are going to work,” he said. “Everybody is going to overlook the simplest things like texting coupons to people and go for the fancy apps, and unfortunately those things tend to be more expensive than they are revenue generators, so there’s no ROI.”

The new report is a followup to one Borrell released late last year on Internet coupons. That report found that coupon use in general had gone up during 2009, and that newspaper coupons were still more popular (though less valuable) than Internet ones.